SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this

document in compliance with the law and SAFLII Policy

IN THE HIGH COURT OF SOUTH AFRICA

(EASTERN CAPE DIVISION-GRAHAMSTOWN)

Case No: 515/2017

In the matter between:

B K Applicant

and

Z K First Respondent

PENSILER TRADING CC

Registration Number: 2010/09264/13 Second Respondent

MZWABANTU CROMWELL MAJOLA Third Respondent

ENOCH MGIJIMA MUNICIPALITY Fourth Respondent

NEDBANK LTD Fifth Respondent

REGISTRAR OF DEEDS, CAPE TOWN Sixth Respondent

_______________________________________________________

JUDGMENT

2

MALUSI J:

[1] This is an application to set aside a sale of immovable property

and other ancillary relief. The application is opposed by all the

respondents save for the fourth and sixth respondents. The fifth

respondent has filed a conditional counter application for the second

respondent to be ordered to make payment of the balance of the loan

it advanced to him to purchase the immovable property. The

conditional counter application is not opposed. Whenever reference

is made to ‘the respondents’ in this judgment, such is to the exclusion

of the fourth and sixth respondents.

[2] The material facts were largely common cause and no disputes

related to these. Despite this, the affidavits filed were plagued by

prolixity. Such diffuse pleadings are to be discouraged. It is

necessary to provide a chronology of events for a better appreciation

of the issues that arise in this matter.

[3] Shorn of all verbiage, the material facts are that the applicant

had been married to the first respondent in community of property.

3

The first respondent initiated divorce action against the applicant.

The regional court sitting in Queenstown issued a decree of divorce

on 26 May 2015. It also ordered division of the joint estate.

[4] It appears there was difficulty in effecting the division of the joint

estate. On 1 September 2015 the first respondent launched an

application in the regional court for the appointment of the third

respondent as a receiver of the joint estate. The powers sought to be

conferred on the third respondent by the regional court were specified

in thirteen sub-paragraphs listed in the notice of motion.

[5] The applicant and the first respondent were owners of

immovable property situated at erf […], Queenstown (‘immovable

property’) which formed part of the joint estate. Whilst the application

was pending, on 2 October 2015 the third respondent, ostensibly ‘in

his capacity as liquidator of the joint estate and by virtue of a court

order issued by the regional court, Queenstown’, concluded a deed of

sale in respect of the immovable property with the second

respondent. Among the terms of the deed of sale it provided that the

purchase price would be paid by way of a deposit of R200 000.00 on

4

4 October 2015 and the balance on transfer of the property into the

second respondent’s name.

[6] On 6 October 2015 the regional court heard the application for

the appointment of the receiver. It granted the relief sought in the

notice of motion. It also granted further powers to the third

respondent that were neither sought in the notice of motion nor was

the applicant given any prior notice that these would be sought in the

following terms:

“2.4 To be authorised to sell, transfer and sign all/any transfer

documentation which may be necessary for the transfer of erf […],

Queenstown, situated in the Lukhanji Municipality, Division of

Queenstown, Province of the Eastern Cape, in extent 960 square

metres;

. . .

3. To ratify and/or hereby ratifies any sale agreement of the

immovable property at issue concluded prior to the appointment date

of the Receiver or Liquidator.”

5

It is not clear on the papers at whose instance the regional court

granted the further powers to the third respondent.

[7] On 11 November 2015 the third respondent informed the

applicant of his appointment as the receiver of the joint estate.

Crucially, he omitted to inform her of the sale of the immovable

property and the further powers granted to him by the regional court.

[8] On 28 January 2016 the third respondent sent to the applicant a

letter of demand to vacate the immovable property not later than 30

January 2016 as it had been sold. It was the first time the applicant

learnt of the sale. The applicant instructed a firm of attorneys to do

what was necessary to defend her rights. It appears the attorneys did

not carry out her instructions.

[9] On 21 September 2016 the property was transferred into the

name of the second respondent on the instructions of the third

respondent. Simultaneously a mortgage bond for the sum of

R774 884.00 which was the balance of the purchase price was

registered in favour of the fifth respondent. The mortgage bond was

6

security for the loan in the aforesaid sum that the fifth respondent had

advanced to the second respondent.

[10] On 14 October 2016 the second respondent launched an

application in the magistrate’s court in Queenstown for the eviction of

the applicant from the immovable property. The applicant defended

that matter which is presently in abeyance pending the finalization of

this application.

[11] On 1 February 2017 the applicant launched this application to

set aside the sale of the immovable property and other ancillary relief.

[12] At the hearing, applications for condonation of the late filing of

the answering affidavits by the first and fifth respondents respectively

were not opposed. Likewise, the application by the applicant for

condonation of the late filing of his replying affidavit was not opposed.

I granted condonation to all the aforementioned parties without any

cost orders.

7

[13] The respondents’ respective counsel raised as a point in limine

that the order of the regional court, whether wrongly granted or

otherwise, stands until it is set aside. It was contended the applicant

has failed to apply for rescission in the regional court or bring a

review application in terms of Uniform Rule 53 in this Court. It was

argued that the deed of sale remained valid as it was ratified by the

regional court order which still stands. The second respondent had

set out these points in limine in a Rule 6 (5)(d)(iii) notice.

[14] In my view the points in limine are inextricably linked with the

merits of the application. The points in limine will be best addressed

in the determination of the merits. I intend to follow that approach.

[15] Ms Veldsman, who appeared for the applicant submitted that

the deed of sale was null and void. This was due to the third

respondent not having authority to enter into the agreement. She

argued that the purported ratification of the sale by the regional court

was a nullity in itself.

8

[16] The respondents’ respective counsel submitted that even if it

were found that the deed of sale was invalid, the transfer should be

regarded as valid according to the abstract theory of transfer. In the

alternative, the respondents placed reliance on section 28(2) of the

Alienation of Land Act 68 of 1981 (“The Act”) to contend that the

alienation was valid ab anitio.

[17] It is worthwhile to restate that on the undisputed facts the third

respondent concluded the deed of sale ostensibly in a representative

capacity. He misrepresented that he was the receiver of the joint

estate and was authorized by a regional court order. This was a

misrepresentation on both counts as at the relevant time he was

neither a receiver nor was there any regional court order authorising

him.

[18] Furthermore, it is not in dispute that the third respondent had no

authority from neither the applicant nor the first respondent as owners

of the immovable property to conclude the deed of sale on 2 October

2015. In my view, the third respondent was acting contrary to the

provisions of section 2(1) of the Act which provides that a sale of land

9

can only be valid if contained in a written deed of alienation, signed

by both parties or agents acting on their authority. Clearly, the third

respondent was acting in contravention of the Act resulting in the

deed of sale being null and void.

[19] In my view the deed of sale was null and void for lack of

authority of any kind by the third respondent. Neither the owners of

the immovable property nor the regional court had granted him

authority to conclude the deed of sale at the time he signed it. He

was simply a third party misrepresenting that he had authority when

in fact he had none whatsoever. Consequently, the ownership of the

immovable property remained vested with the applicant and the first

respondent despite the deed of sale and registration of transfer.

[20] The respondents contend that the deed of sale was ‘ratified’ by

the order of the regional court. Implicit in that contention is an

acknowledgement that on its own the deed of sale is invalid. On this

contention it could only come into life by the order of the regional

court.

10

[21] I find no merit in the contention. A court order cannot revive a

nullity. In Kourie v Bean it was stated in categoric terms:

“If the decision is correct that the deed which was signed did

not in fact comply with the provisions of the law, it was a nullity,

as was pointed out by Innes JA in Wilken v Kohler (1913, AD

135 at page 141). Being a nullity it could not be rectified so as

to become a valid contract. Nor does the fact that the defendant

was allowed to occupy the property help to identify it for

purposes of validating the deed of sale. As was said by Innes

JA in Wilken’s case at page 143: This agreement, being of no

force and effect in law, cannot, it seems to me be validated by

reason of the fact that it had been partly carried through.”1

[22] A court order that purports to revive an act that is null and void

is a nullity in itself. The headnote in Van der Merwe v Van der Merwe

an Andere states the following:

1 1949 (2) SA 567 (T) at 572; See also Friends of the Sick Association v Commercial Properties (Pty) Ltd and Another 1996 (4) SA 154 at 158 A; Cape Dairy and General Livestock Auctioneers v Sim 1924 AD 167 at 170; Mathipa v Vista University 2000 (1) SA 396 (T) at 400F – 410D.

11

“The general point of departure in the interpretation of

statutes is that, in the absence of a contrary legislative

intention, an act committed in contravention of a statute is

void. Where the wording of section … is manifestly

peremptory, … the result [is] that a juristic act performed by

a person without the required authority is null and void.

Once it has been accepted that the unauthorised act of a

trustee is void, it follows that it cannot be ratified.”2

[23] A considerable amount of time was expended by all the parties

on the status of the regional court order purporting to ratify the deed

of sale. The applicant’s counsel, Ms Veldsman, submitted that it is a

nullity and must, without more, be disregarded. The respective

counsel for the respondents were in unison that the regional court

order stands until set aside by another court.

[24] The general rule in our law is that an order of court stands as

valid and effective, until it is set aside or rescinded.3 It appears the

2 2000 (2) SA 519 (C) 3 Clipsal Australia (Pty) Ltd v GAP Distributors (Pty) Ltd 2009 (3) SA 305 (W) at 311I-313E; Colverwell v

Beira 1992 (4) SA 490(W) at 494A-C; Bezuidenhout v Patensie Sitrus Befeerdeed Bpk 2001 (2) SA 224 (E)

at 229B-C.

12

rule is based on public policy to provide certainty and finality in legal

proceedings.

[25] An exception to the general rule is that when a judgment and

order is a nullity, invalid and of no effect it may be disregarded. A

pronouncement or setting aside by a court is unnecessary.4 Clearly

such an order has no standing in law. It may be treated as if it was

never issued by a court.

[26] Ms Veldsman submitted that the failure to give prior notice of

the two further orders rendered them invalid. She argued that the

applicant ought to be regarded as not having been cited as a party as

far as the two orders are concerned. It is not necessary to come to a

decision on this submission as it has already been found that the

regional court order is a nullity.

[27] In summary, I have already found that the deed of sale was a

nullity. The order by the regional court that purported to ratify a nullity

is null and void itself. As such there is no need to either rescind or

4 Master of the High Court Northern Gauteng High Court, Pretoria v Motala NO & Others 2012 (3) SA

325 (SCA) para 11-15 and the authorities cited therein.

13

set aside the regional court order. It may simply be disregarded as it

has no standing in law.

[28] However, that is not the end of the matter as the finding on the

invalidity of the deed of sale is the first enquiry. The second enquiry

is whether the transfer should be regarded as valid despite the

invalidity of the underlying sale which was the causa for the transfer.

[29] It is settled law that the abstract theory of transfer applies to

immovable property.5 The abstract theory has two requirements for

ownership to pass to the transferee. The first is delivery which is

effected by registration of transfer in the deeds office. The second is

a ‘real agreement’ whose main element is an intention by the

transferor to transfer ownership coupled with a corresponding

intention of the transferee to become owner of the property.

According to the theory, ownership may pass despite the underlying

sale being invalid but it will not pass if there is a defect in the real

agreement.

5 Legator McKenna Inc & Another v Shea & Others 2010 (1) SA 35 (SCA) para 21 & 22; Du Plessis v

Prophitus & Another 2010 (1) SA 49 (SCA); Meintjies NO v Coetzer & Others 2010 (5) SA 186 (SCA)

para 8.

14

[30] It is common cause that transfer of the immovable property has

been registered in the deeds office in the second respondent’s name.

This was effected on 21 September 2016. Consequently, the first

requirement of the abstract theory is fulfilled.

[31] There is no dispute that the owners of the immovable property,

certainly the applicant, had no intention to transfer ownership to the

second respondent. The applicant has stated categorically that she

intended to transfer ownership to herself to the exclusion of the first

respondent. The intention on the part of the first respondent is

irrelevant as he had no authority to transfer the property. The

applicant and first respondent could not lose ownership in these

circumstances and they remain owners despite registration of transfer

to the second respondent.

[32] The second and fifth respondents sought to rely on Legator

McKenna (supra) for the contention that there was a real agreement

in this matter. The facts in Legator McKenna are distinguishable from

the present matter. McKenna had already been appointed by the

High Court as curator bonis. All that was outstanding was for the

15

Master of the High Court to issue him with letters of executorship. He

concluded the deed of sale in the period before such letters were

issued to him. Importantly, it was stated by the SCA that the High

Court ‘had granted him permission to sell the house beforehand

subject to the approval of the Master of the High Court’. Clearly,

McKenna had the proper authority to form an intention to transfer the

property. This was the reason the SCA held that there was a real

agreement.

[33] Brand JA stated, with characteristic clarity, in an obiter dictum

in McKenna, that in circumstances where ‘the legislature intended a

contravention of an Act to be void, a sale by a curator without letters

of curatorship would be invalid; so would a real agreement; and

transfer by a curator without letters of curatorship would therefore not

pass ownership to the transferee.’6 The facts are similar in this

matter and the statement by Brand JA finds application. In casu the

real agreement was also defective.

6 McKenna ibid at para 25

16

[34] In the alternative, the respondents relied on section 28(2) of the

Act. The section deals with an alienation not in compliance with

section 2(1) requirements for a valid deed of alienation. The section

provides that a non-compliant alienation will be valid ab initio if the

alienee had performed in full in terms of the deed or contract and the

land in question has been transferred to the alienee.

[35] In my view, section 28(2) is irrelevant in this matter as the

transfer was effected on a deed of sale and other documents not

signed by the owners of the immovable property but by a person

without authority.7 The purpose of section 28(2) of the Act is to

validate alienation which is in all other respects compliant with the Act

save for non-compliance with the requirements of section 2(1). It is

not to revive a null and void deed of sale which has not been signed

by the owners or their authorized agent.

[36] Brand JA has stated at para 26 that section 28(2) of the Act is

the codification by the legislature of the so-called ‘rule in Wilken v

7 Meinjties N.O, ibid at para 12

17

Kohler’.8 The rule provides that if both parties to an invalid agreement

have performed in full, neither party can recover his or her

performance purely on the basis that the agreement was invalid9.

Clearly, this relates to parties who are entitled to sell the property to

each other but have merely not complied with the legislative

requirements.

[37] It appears to me that the third respondent acted illegally in

selling immovable property he neither owned nor was authorised to

sell. Shongwe JA in Meintjies held that courts should not

countenance illegal contracts as they are contrary to public policy and

constitutional principles. He added that courts should decline to

enforce or give life to contracts that are in conflict with constitutional

values.10

[38] The fifth respondent filed a conditional counter application in

the event the applicant was successful. It is manifest from the above

that I hold the view that the applicant must succeed. The counter

application sought an order that the second respondent must be

8 1913 AD 135. 9 Legator McKenna ibid at para 26 and 27 10 Meintjies NO ibid at paragraph 15

18

ordered to make payment to the fifth respondent in the sum of

R761 425. 20 together with interest thereon.

[39] The fifth respondent was not involved in the sale of the

immovable property other than having granted loan finance to the

second respondent. The funds procured through the loan agreement

were utilized by the second respondent to pay the balance of the

purchase price of the immovable property. The loan agreement was

concluded on 3 February 2016.The fifth respondent registered a

mortgage bond over the immovable property as security for the loan it

provided to the second respondent.

[40] The loan agreement contained the standard conditions usually

embodied in this type of agreement. The most pertinent condition for

present purposes is that in the event the second respondent be

dispossessed of the immovable property for any reason then it would

repay the balance owing at the time despite not being in breach of

any provision of the loan agreement. That dispossession will occur on

delivery of this judgment.

19

[41] The deponent on behalf of the fifth respondent averred that it is

not necessary to invoke the provisions of section 129 of the National

Credit Act 34 of 2005. The reason proffered was that the second

respondent was not in breach of his obligations as his monthly

payments were up to date.

[42] I find merit in the averment. Section 129 (1)(a) stipulates

procedures to be followed ‘if the consumer is in default’ and the

parties to the agreement either intend to resolve any dispute ‘or

develop and agree on a plan to bring payments under the agreement

up to date’. In my view, the section finds application when there is a

dispute or payments are in arrears and not in the present

circumstances. On the facts of this matter, there is no dispute

between the second and fifth respondents. It is common cause that

there are no arrears. In these circumstances, I agree that section 129

of the National Credit Act is not applicable.

[43] The second respondent did not oppose the counter application.

Neither was argument advanced by counsel why the relief sought by

the fifth respondent against the second respondent should not be

20

granted. I am satisfied that a proper case has been made out by the

fifth respondent for the relief sought in the counter application.

[44] The applicant sought that costs be awarded on a punitive scale,

especially against the third respondent. The basis was that the third

respondent was an attorney and should have known better.

[45] In my view, it will not be fair and just to award cost on a punitive

scale. It has not been shown that the respondents acted mala fide.

Their opposition of the application appears to have been actuated by

a misunderstanding of the law. A punitive costs order is not warranted

on the facts of this matter.

[46] I intend to order that the sixth respondent reverse the

registration of transfer of the immovable property and register it in

applicant and first respondent’s names. Should costs be warranted to

effect the reversal, then the third respondent will be personally liable

for those. He is the person solely responsible for the

misrepresentation which led to this application. It is only fair that he

bears the costs.

21

[47] The fifth respondent submitted that the applicant must be liable

for the costs of the counter application. No basis was provided for the

submission.

[48] I find no merit in the submission. The applicant was only an

interested party in the counter application as it pertained to an

agreement between the second and third respondent. He did not

know of the sale until 28 January 2016. He then instructed attorneys

within a reasonable time to protect his interests. By that time the loan

agreement had already been concluded. It will be unfair to mulcate

the applicant with costs in these circumstances.

[49] In the result, the following order will issue:

1. The sale of the property known as ERF […] Queenstown,

situated at no […] O Crescent, Westhof, Queenstown,

Eastern Cape is set aside.

22

2. The sixth respondent is ordered to cancel Deed of Transfer

no T5763/2016 within 4 (four) weeks from date of service of

this order in terms of section 6(2) of the Deeds Registry Act

47 of 1937.

3. The sixth respondent is ordered to transfer the property

known as ERF […] Queenstown, situated at no […] O.

Crescent, Westhof, Queenstown, Eastern Cape to the name

of the applicant and the first respondent, within 4 (four)

weeks from date of service of the order.

4. The third respondent is ordered to pay de bonis propiis the

transfer and registration duties and/or fees, if any, within 7

(seven) days from date of demand, to give effect to

paragraph 2 and 3 above.

5. It is declared that the property known as ERF […]

Queenstown, situated at no […] O. Crescent, Westhof,

Queenstown, Eastern Cape is jointly owned by the applicant

and the first respondent

23

6. The second respondent’s notice in terms of Rule 6(5)(d)(iii)

is dismissed.

7. Judgment is granted in favour of the fifth respondent against

the second respondent for:

7.1 Payment of the amount of R761 425. 20;

7.2 Interest thereon calculated at the rate of 13% per

annum, compounded monthly in arrears from 1st July

2017 to date of final payment, both days inclusive,

being the amount outstanding, due and owing to the

fifth respondent;

7.3 Costs of the counter application.

8. The first respondent (from her separate estate), the second

respondent, the third respondent and the fifth respondent are

ordered jointly and severally, the one paying the others to be

absolved, to pay the costs of the application.

9. The first, second, third and fifth respondents are ordered

jointly and severally, the one paying the others to be

24

absolved, to pay the wasted costs occasioned by the

postponement of 1 June 2017.

_________________________ T. MALUSI JUDGE OF THE HIGH COURT Appearances Counsel for the Applicant Advocate Veldsman Attorneys for the Applicant : Dold and Stone 10 African Street Grahamstown Ref: Mrs Wolmarans/Mori-Lee Counsel for the 1st and 3rd Respondent : Advocate Mpahlwa Attorneys for the 1st and 3rd Respondent: Mgangatho Attorneys 119 High Street Grahamstown Ref: Mr Mgangatho Counsel for the 2nd Respondent : Advocate Olivier Attorneys for the Applicant : Nolte Smit Incorporated Grahamstown Ref: Frans/AGB1/0001/JK Counsel for the 5th Respondent : Advocate De La Harpe Attorneys for the 5th Respondent : Weeldon Rushmere and Cole 119 High Street Grahamstown Ref: Mr Brody/Glyn/S18343 Date Heard : 12 October 2017 Date Delivered : 1 March 2018